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2024 (8) TMI 781 - AT - Central ExciseWrongful availment of Cenvat Credit of 4% Special Additional Duty of Excise (SAD) on the basis of supplementary invoice issued by the appellant s sister - Rule 9(b) of Cenvat Credit Rules, 2004 - reveue neutrality - HELD THAT - As of now, it is a settled law that in respect of the stock transfer from one unit to the other unit of the same entity, since, the same is not considered as sale of goods but only a stock transfer, no SAD is payable by the transferor unit to the transferee unit. In the present case, same facts is involved that the appellant s sister unit has supplied the goods to the appellant without payment of SAD, but subsequently, the SAD was paid and supplementary invoice was issued. From the various judgments in M/S STI INDUSTRIES VERSUS CCE DAMAN VICE VERSA 2014 (12) TMI 1130 - CESTAT AHMEDABAD and M/S MICRO INKS VERSUS CCE. ST. DAMAN 2014 (2) TMI 207 - CESTAT AHMEDABAD , on the identical issue, it has been settled that in respect of transfer of goods from EOU to other unit of appellant no SAD payment is required. Since, the payment of SAD itself was not required to be made, there is no question of any suppression or willful misstatement, etc. involved in the transaction. Moreover, the transaction is of transfer from one unit to another unit of the same entity, therefore, this is a clear case of Revenue neutrality, for this reason also suppression of fact or willful misstatement, etc. cannot be alleged. Since, no suppression of fact, willful misstatement, etc. elements are involved in the present case, Rule 9 1(b) cannot be invoked. Accordingly, the appellant s availment of Cenvat Credit on supplementary invoice is absolutely legal and correct. The impugned order is set aside. Appeals are allowed.
Issues Involved:
1. Wrongful availment of Cenvat Credit on Special Additional Duty of Excise (SAD). 2. Applicability of Rule 9(1)(b) of Cenvat Credit Rules, 2004. 3. Suppression of facts, willful misstatement, and revenue neutrality. 4. Personal penalty imposed under Rule 26(1) of Central Excise Rules, 2002. Issue-wise Detailed Analysis: 1. Wrongful Availment of Cenvat Credit on Special Additional Duty of Excise (SAD): The appellant was found to have availed Cenvat Credit of 4% SAD based on supplementary invoices issued by their sister unit, which was a 100% EOU and de-bonded from 12.10.2011. The department contended that this credit was inadmissible under Rule 9(b) of Cenvat Credit Rules, 2004, as the duty was not paid by the sister unit due to fraud, collusion, or willful misstatement. 2. Applicability of Rule 9(1)(b) of Cenvat Credit Rules, 2004: The appellant argued that their sister unit was not liable to pay SAD as the transaction was a stock transfer and not a sale. This argument was supported by multiple judgments, including Skipperseil Limited v. CCE, Alwar, and CCE Jaipur v. Autolite India Ltd., which established that no SAD is payable on stock transfers between units of the same entity. The Tribunal agreed with this argument, stating that since the sister unit was not liable to pay SAD, Rule 9(1)(b) was not applicable. 3. Suppression of Facts, Willful Misstatement, and Revenue Neutrality: The appellant contended that even though their sister unit settled its case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, there was no suppression of facts or willful misstatement as SAD was not payable in the first place. The Tribunal found that since the transaction involved a stock transfer and not a sale, there was no suppression of facts or willful misstatement. The Tribunal also noted that the transaction was revenue-neutral as it was between units of the same entity, further negating the applicability of Rule 9(1)(b). 4. Personal Penalty Imposed under Rule 26(1) of Central Excise Rules, 2002: The appeal by Shri Manohar Maheshwari, General Manager of the appellant company, sought relief from the personal penalty imposed under Rule 26(1). Since the demand against the company was found to be unsustainable, the penalty on Shri Manohar Maheshwari was also deemed unsustainable. Conclusion: The Tribunal set aside the impugned order, allowing the appeals and confirming that the appellant's availment of Cenvat Credit on supplementary invoices was legal and correct. Consequently, the personal penalty imposed on Shri Manohar Maheshwari was also set aside. The judgment was pronounced in the open court on 13.08.2024.
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